Correlation Between Roundhill Video and First Trust

Can any of the company-specific risk be diversified away by investing in both Roundhill Video and First Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Roundhill Video and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Roundhill Video Games and First Trust S Network, you can compare the effects of market volatilities on Roundhill Video and First Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Roundhill Video with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Roundhill Video and First Trust.

Diversification Opportunities for Roundhill Video and First Trust

0.97

Correlation Coefficient

Roundhill Video  First Trust

Almost no diversification

The 3 months correlation between Roundhill and First is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Roundhill Video Games and First Trust S Network in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust S and Roundhill Video is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Roundhill Video Games are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust S has no effect on the direction of Roundhill Video i.e., Roundhill Video and First Trust go up and down completely randomly.

Pair Corralation between Roundhill Video and First Trust

Given the investment horizon of 90 days Roundhill Video Games is expected to under-perform the First Trust. In addition to that, Roundhill Video is 1.51 times more volatile than First Trust S Network. It trades about -0.17 of its total potential returns per unit of risk. First Trust S Network is currently generating about -0.21 per unit of volatility. If you would invest  2,957  in First Trust S Network on October 7, 2024 and sell it today you would lose (134.00) from holding First Trust S Network or give up 4.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Roundhill Video Games  vs.  First Trust S Network

Roundhill Video Games

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Roundhill Video Games are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Roundhill Video exhibited solid returns over the last few months and may actually be approaching a breakup point.

First Trust S

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust S Network are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, First Trust is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Roundhill Video and First Trust

The main advantage of trading using opposite Roundhill Video and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Roundhill Video position performs unexpectedly, First Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in First Trust will offset losses from the drop in First Trust's long position.

The idea behind Roundhill Video Games and First Trust S Network pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.